Traders sue

Traders sue US options markets on antitrust issues
Reuters, 01.28.04, 4:57 PM ET
CHICAGO, Jan 28 (Reuters) - A group of options traders have sued four floor-based U.S. equity options exchanges and 35 options specialist and market making firms, accusing them of violations of securities and antitrust laws, a lawyer representing the plaintiffs said on Wednesday.

The lawsuit was filed in the U.S. District Court for the Northern District of Illinois on Jan. 20, on behalf of several options traders who have accounts that allow them direct access to exchanges, said Andrew Friedman, an attorney at Wechsler Harwood LLP.

The suit named the Chicago Board Options Exchange, American Stock Exchange, Philadelphia Stock Exchange and Pacific Exchange as well as numerous options market making and specialist firms as defendants, he said.

The fifth U.S. options exchange, the all-electronic International Securities Exchange, was not named in the suit.

"Primarily, the suit claims that the exchanges, the specialists and market makers discriminated against the orders submitted by customers with direct access to the exchanges," Friedman said.

The suit also charged the defendants failed to honor their obligation to post firm quotes, to automatically execute orders at the quoted prices and to honor cancellation requests, Friedman said.

A spokesman for the Chicago Board Options Exchange said it has reviewed the complaint, which it said was filed last week by five direct access customers.

"Both the factual and legal claims made in that complaint against CBOE are without merit," he said. "CBOE will not comment on the specifics of pending litigation, but it will vigorously defend itself against these baseless claims."

The Philadelphia Stock Exchange said on Wednesday it was aware of the lawsuit but had not been served. The American Stock Exchange and the Pacific Exchange declined to comment.